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hotelfocusCorporate news from Christie + Co Spring 2008

“Although the current economic climate has caused considerable apprehension in the hotel market, trading fundamentals are still strong, with reports of encouraging occupancy levels and growth in RevPAR. Christie + Co brokered a number of notable transactions in the first few weeks of the year, proving that buyers are still keen to complete deals — as long as the price is right,” says Director & Head of , Jeremy Hill. Deals will continue despite market apprehension Contents include

Owners they are a changing for Amsterdam hotel 2

RREEF banks on Four Pillars deal for future growth 3

Menzies Hotels acquires Thistle package 5

Investing in the development of an even stronger team 6

Christie + Co increases presence in France 9

JER Partners goes that little bit further with Christie + Co 10

A tale of two cities 11

German market set 2007 was a story of two halves for the hotel Having witnessed impressive growth in average for interesting year 12 property sector. The continued “wall of money” hotel property values at the beginning of 2007, was the theme during the first half of the year, values softened towards the end of the year as Christie + Co takes the with many sources of equity and debt, and transactional activity slowed. Whilst this may Express route 14 demand for hotel assets significantly outstripping sound disappointing, it is worth noting that we Taking our intelligent approach supply. Prices boomed and yields fell to recorded a positive increase, not a fall in hotel onto the international stage 16 unprecedented levels as investors simply values during 2007. Analysis of our own hotel sales couldn’t get enough hotel sector assets. showed that average prices moved forward by Christie + Co 6.1% across the year as a whole. enters Scandinavia 17 During the final few months of the year, the effects of the crisis in the US sub-prime mortgage market In our general discussions with hotel operators started to become evident. As concerns about the and investors, the recent sentiment that has come cost and availability of debt prompted purchasers across is one of apprehension. to seek more competitive prices for hotel assets, we started to see a smoothing of price levels. continued on page 2

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Market Intelligence Deals will continue by Jeremy Jones, despite market Director of Corporate Hotels apprehension continued from front Owners they are a changing

A number of deals have been set in a holding pattern by the instability in the financial markets for Amsterdam hotel and are currently waiting to land/complete. New supply is also currently benign, with a current “wait and see” attitude preventing owners from Acting on behalf of Apollo Real Estate Advisors, Frank Croston, consultant for Hamilton, said: presenting their assets to the market. Christie + Co sold the stylish Dylan Hotel in “After taking over direct management of the Amsterdam for an undisclosed sum to a Dylan in 2005, we improved trading significantly, However, trading fundamentals in almost all confidential buyer. adding substantially to profitability within the major European hotel markets remain strong, first 12 months. with significantly above-inflation growth in Apollo acquired the 41-room hotel in 2003. RevPAR continuing unabated throughout 2007. It was originally launched as a Blakes Hotel “The initial improvements were subsequently The outlook for hotel trading across Europe in 1999, before being renamed as the Dylan consolidated leading to substantial improvements remains good, with many markets enjoying two years later. in EBITDA, allowing Apollo to optimise its RevPAR and profit growth well into double sale price.” digits year-on-year for 2007, with the same The company appointed Hamilton Hotel Partners, expected for 2008. the -based advisory firm, in 2004 to asset Hamilton also asset manages the Fairmont manage its investment and then to directly St Andrews Hotel in , and manages There is still debt available to fund transactions manage the hotel in the middle of 2005. the Gran Hotel La Florida in Barcelona on and there is also plenty of private capital. While behalf of Apollo. highly leveraged “mega-deals” are most likely to The property, which is located in a 17th century be affected by the credit crisis, single asset deals building in the centre of the Dutch capital, and smaller portfolio deals are still deliverable, recently had its ground floor refurbished and, albeit at potentially higher finance costs, and since Hamilton took over direct management in with less leverage being available. 2005, has seen EBITDA improve substantially.

The ongoing demand for quality assets will help ensure that we continue to witness significant deals during 2008. There will be fewer sales by the major hotel companies this year due to the fact that they have very little left to sell.

However, good quality, well located hotel property will still be highly sought-after by a variety of buyers, and this combined with possible solutions to the “credit crunch”, will push prices forward during the latter half of the year.

We believe that further deals will follow as investors regain their confidence.

2 Christie + Co brokers St Helens sale for Hilton by Jeremy Jones, Director, Corporate Hotels

Four Pillars Hotel, Tortworth Court RREEF banks on Four Pillars deal for future growth by Dan Griffiths, Director, Investment

Christie + Co sold the Four Pillars Hotel Group Under the terms of the deal Brian Murtagh, to RREEF Real Estate, the global investment Four Pillars’ founding director, and Charles management business of Deutsche Bank’s asset Holmes, the group’s chief executive, retained a management division, for an undisclosed sum holding in the group. In addition, a joint venture in the region of £120 million. was established between RREEF and the four Christie + Co acted for Hilton Hotels in the sale original founding shareholders of Four Pillars to of the purpose-built, 84-room Hilton St Helens in We were originally instructed to sell the identify and build further sites, which will be Lancashire to WG Mitchell, the -based company’s hotel portfolio, which is spread operated under the Four Pillars banner. property group. across Oxfordshire and Gloucestershire, on a sale and manage-back basis. However, we received The joint venture has already been awarded A full and open marketing campaign generated interest from a number of private equity planning permission to develop its first new high levels of interest and we received a number investors who were keen to acquire the entire hotel in Harwell, Oxfordshire and has a number of offers for the hotel, which was available on Four Pillars Hotel Group, including its head office of other sites in the pipeline. an unencumbered basis. operations and development pipeline of two additional sites. Alistair Dixon, chief executive, real estate The deal was agreed with WG Mitchell for a opportunity funds at RREEF, said the group figure in excess of the original guide price. The company was ultimately acquired by intended to build a “substantial” portfolio The sale of the property confirms that the market RREEF Real Estate, marking Deutsche Bank’s through Four Pillars in the UK. for well located hotels remains strong. We were first investment in the UK hotel market. particularly pleased that our marketing campaign RREEF Real Estate has made an astute strategic generated substantial, well funded offers and that purchase. They have cleverly chosen to enter an the eventual sale surpassed initial expectations. undersupplied section of the market, which will provide them with a platform for future growth. WG Mitchell has granted Rezidor SAS a management contract for the hotel, which was purpose-built in 1992 and is located close to the North West motorway network. Rezidor plans to operate the hotel under its budget, full-service, Park Inn brand.

The property, which includes a wide range of conference, meeting and banqueting areas, Four Pillars Hotel as well as a fully equipped leisure club, has reported high occupancy levels for both mid-week corporate trade and weekend leisure guests.

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Stratford Market Intelligence Victoria sold by Ken Simms, Director to QHotels acquires by Dan Griffiths, Director, Investment St Andrews property

We were confidentially instructed to market the The group will open its next property in Poole, 22-bedroom St Andrews Golf Hotel on behalf of Dorset, at the end of May. It will be followed by Joe Headon, chairman of St Andrews Golf Hotel further openings this year in Newcastle and Ltd, at the end of October. Edinburgh. A Hotel du Vin is also scheduled to open in in 2009. The hotel occupies a prominent position on The Scores in St Andrews, and overlooks Founded in Winchester in 1994, Hotel du Vin St Andrews Bay. currently has properties located in , Brighton, Bristol, Cambridge, Cheltenham, It comprises two function rooms, the Number Glasgow, Harrogate, Henley-upon-Thames, Forty restaurant, the Number Forty cocktail bar, Tunbridge Wells, Winchester and York. and the Ma Bells bar. Hotel du Vin Ltd was acquired by Marylebone Last year we were instructed by a long standing Hotel du Vin, which currently operates a portfolio Warwick Balfour in October 2004. MWB is a client to market the freehold interest in the of 11 hotels, acquired the property for an public company quoted on the London Stock Stratford Victoria Hotel in Stratford-upon-Avon, undisclosed sum. Exchange, which also owns the Warwickshire. Group of hotels.

The 102-room property was marketed subject Each hotel boasts its own unique location, be it to an ongoing management contract with townhouse, brewery, warehouse or renovated Marston Hotels. hospital, complemented by the unmistakable Hotel du Vin essentials. French-style bistros Marston had indicated an interest in acquiring with a modern edge; unsurpassed wine cellars; the freehold interest of the property but during eclectic furnishings; Egyptian linen; monsoon-like the sale process the 12-strong group was St Andrews Golf Hotel showers and hand-sprung mattresses. acquired by QHotels for £180 million. The company had already acquired properties in Christie + Co previously sold One Devonshire QHotels, which took its portfolio to 21 hotels Cheltenham and Glasgow through Christie + Co, Gardens in the West End of Glasgow and the with the purchase, decided to go forward with so we knew that the St Andrews Golf Hotel might Carlton Hotel in Cheltenham to Hotel du Vin. the acquisition of the freehold, and acquired the meet their requirements. property for an undisclosed sum off an asking price of £16 million. The group plans to refurbish the hotel and has already submitted a planning application The hotel is situated close to its sister property, to add a further 21 rooms to the existing site. Stratford Manor. Robert Cook, chief executive of Hotel du Vin, The sale of Marston Hotels to QHotels came said: “It was a particular aim of the business to two years after a previous attempt to sell move to St Andrews and the group is absolutely One Devonshire Gardens Hotel the business was cancelled in favour of a delighted to acquire such a fantastic building. £150 million refinancing. “Depending on receiving planning permission for the extra rooms, I hope the hotel will re-open in time for the 2008 British Open Golf Championship, which will be held in July at the nearby St Andrews Royal & Ancient Golf Club.”

4 Offers sought for interest in Isles of Glencoe Hotel by Kerr Young, Investment

Thistle Hotel in Irvine Christie + Co and Frazer Kidd & Partners have been jointly instructed by a private investor to sell the investment interest in the Isles of Glencoe Menzies Hotels acquires Hotel and leisure club near Fort William. Offers in excess of £6.15 million are being sought for the investment interest in the property, which Thistle package is currently operated on a 25-year lease by Folio Hotels. With a portfolio of more than 30 hotels, by Sebastian Meredith, Associate Director Folio operates a collection of three and four star hotels across the UK. Acting on behalf of CIT Group, advisors to Menzies has announced that it is to invest Curzon Hotels, we sold a portfolio of eight £12 million on refurbishing and rebranding The 59-room Isles of Glencoe property, to Menzies Hotels for an the eight hotels in line with its existing estate which is set within over 14 acres of ground undisclosed sum. over the next 18 months. on the shores of Loch Leven, comprises the Macpherson Restaurant, a lounge bar and We were instructed to market the hotels on Tim Penter, chief executive of Menzies Hotels, conservatory, and offers spectacular views an unencumbered basis – free of branding said: “The acquisition of these eight hotels of the Scottish highlands. and management. provided us with the ideal opportunity to continue to grow and develop our portfolio of hotels. The Isles of Glencoe Hotel offers a unique Although the assets no longer fit Thistle’s investment opportunity, with a number of criteria and branding requirements, we received “All the hotels are in prime locations improving opportunities for further development. offers from a number of potential buyers who our geographical spread across the UK. Our recognised the potential of the properties. existing hotels continue to enjoy buoyant Subject to planning permission, the adjacent trading and we are confident that these peninsula would provide an excellent location The eight properties were part of a portfolio new hotels will provide the company with for the development of holiday lodges and an of 28 Thistle Hotels acquired by Curzon Hotels a significant return on investment”. adjoining building, which currently lies empty, last year for around £400 million. would lend itself to additional leisure facilities. The latest deal takes the company’s estate to The hotels, which comprise 978 rooms and 23 hotels throughout and Scotland, At offers in excess of £6.15 million, representing 45 meeting rooms, include the Thistle Gatwick which includes nine health and fitness clubs. a net initial yield of 6.7% and a reversionary Airport, Thistle Manchester Airport, Thistle yield of 7.6%, we are expecting to receive a high Birmingham Edgbaston and the Dyce Skean level of interest for this investment opportunity. Dhu in .

Neil Palmer, director of CIT Group, advisors to Curzon, said: “We are delighted to have quickly completed the rationalisation of the portfolio of 28 Thistle Hotels acquired earlier this year, through the sale to Menzies Hotels and look forward to completing the capital investment programme for the remaining 20 assets.”

Thistle Hotel in Stevenage

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Greenwich Market boutique opportunity

by Kerr Young, Investment

Having previously carried out a feasibility study on the location, Christie + Co has been appointed to find a hotel company to partner the redevelopment planning application, which will be submitted later this year, and also to operate the completed hotel. In addition to the boutique hotel, the completed regeneration scheme will see the restoration of a number of historic buildings, the creation of a larger, more accessible market, and the provision of new shops and offices.

Situated in the heart of a thriving tourist area, the new hotel will also have easy access to a The planned regeneration project number of other high-profile trade generators including the O2 Arena and Canary Wharf. Situated on the River Thames, Maritime Greenwich is a World Heritage Site — famous for such historic landmarks as the Royal Observatory, the home of Greenwich Mean Time and the Meridian Line. Christie + Co has been instructed by the Crown charity, Greenwich Hospital, to secure a hotel operator for a boutique opportunity in the very heart of the town. Christie + Co’s accomplished Corporate Investment team has been further strengthened Greenwich Hospital is the owner of a large with the appointment of Jonathan Parrish and The Island Site proportion of Greenwich town centre, including Simon Dodd. the Island Site, which is occupied by the historic market and has been earmarked for regeneration. Jonathan Parrish, who has more than 24 years’ The planned boutique hotel will form the hospitality industry experience, has been centrepiece of an exciting redevelopment on appointed to head up the company’s expanding King William Walk, which will replace post-war Investment team. Jonathan has extensive buildings with something more in keeping experience in the investment and development with the surrounding Grade II-listed buildings. disciplines and has completed a considerable With its main entrance on King William Walk, number of successful site acquisitions, operator overlooking the Old Royal Naval College and the searches, planning projects, lease negotiations Dreadnought Library, the boutique hotel will also Greenwich town centre and investment deals for hotel sector clients. occupy the upper floors of other redeveloped buildings in and around the market. Simon Dodd, who has more than 9 years’ commercial property experience, has worked for Christie + Co since June 2006. He qualified as a Chartered Surveyor in 2005, having gained a First Class Honours degree in Estates Management, which he completed part-time, whilst working in general commercial practice.

6 Upscale operators sought Investing in the development for new urban of an even stronger team quarter by Jeremy Hill, Director & Head of Hotels by Dan Griffiths, Director, Investment

Christie + Co has been given the go-ahead to seek operators for two new hotel opportunities in a major mixed-use development scheme in Salford, Greater Manchester.

We have been instructed by developer BSC Group to seek upscale hotel operators for a 140-room property and a 90-room property, which will form part of the Canopus Greengate development that lies to the north-west of Manchester’s city centre.

The project will include two stunning towers of 46 and 31 storeys, of which the former will become the second highest building in Manchester on completion in 2011.

Both towers will feature a pool and spa complex on the roof, while there are also plans for the city’s first observation deck at the top of the 46-storey tower.

The scheme will also create 403 new homes, a new From left to right: Kerr Young, Jonathan Parrish, Simon Dodd, Daniel Griffiths public square and urban park, plus around 8,000 square metres of retail space, which has been Moving from Christie + Co’s Maidstone office to Demand for investment and development earmarked for cafes, bars, restaurants and shops. the London Corporate office in November 2007, guidance has increased in recent months and, It will also include an underground car park, Simon now focuses on providing professional as a provider of specialist hotel sector advice, with approximately 400 spaces. consultancy services and brokerage advice to Christie + Co receives a large number of referrals investor and developer clients. from major clients. By investing in the expansion The Canopus development will become an of our team, we are able to respond even more important gateway site at the heart of the Typical activities of Christie + Co’s Corporate effectively to our clients’ needs. regeneration of the city and the whole of the Investment team, which is completed by Daniel Greengate area, which is being developed to Griffiths and Kerr Young, include complex open up the boundaries between Manchester and investment deal structuring, operator searches, Salford with new walkways linking the two areas. brand franchise advice, and lease and management contract negotiation.

High profile projects have included the £417 million sale of the Hilton Metropoles in London and Birmingham; the acquisition of the 272-bedroom Radisson Portman Hotel in London; the £120 million sale of the Four Pillars Hotel Group; and Moorfield Group’s £400 million acquisition of a portfolio of 24 Macdonald Hotels. Canopus Greengate development

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Christie + Co helps Dynamique Hotels to live up to its name by Thomas Lamson, Managing Director, France

Christie + Co’s French team acted on behalf of Dynamique Hotels, the hotel investment fund New opportunity on created by CB Richard Ellis Investors, to acquire the 19-strong Bonsaï hotel chain for an undisclosed sum. the French Riviera

The budget hotels, which comprise around 1,000 rooms in total, currently operate under three by Thomas Lamson, brands — Bonsaï Escale, Bonsaï Etape, and Managing Director, France Bonsaï Relais. Retaining its glamour and charm, the French The development of the French Riviera’s Dynamique Hotels was responsible for driving Riviera continues to attract a multitude of conference and event facilities has enhanced the much of the hotel investment activity in France business and leisure travellers. Nice Cote d’Azur demand for high quality hotel accommodation, during 2007. The company made a number of key International Airport receives in excess of nine so it is perhaps unsurprising that hotel investors acquisitions to quickly become the fourth largest million visitors each year, of which 40% are continue to target the area. Christie + Co opened hotel chain in the country. Having previously business travellers, making it France’s second an office in Marseilles during 2006 in order to acquired hotel portfolios from Akena, Groupe busiest gateway airport after Charles de Gaulle respond to increasing demand for brokerage Soghest and Géo, Dynamique Hotels’ recent in Paris. and advisory services within the region. acquisitions have included the 95-bedroom Royal Mirabeau hotel in Aix-en-Provence, and the Cannes and Nice both have thriving convention Having sold the 152-bedroom in Nice to RMH group, comprising Balladins hotels with centres, which are being developed to INVESCO Real Estate last year, Christie + Co has its 32 subsidiaries and 125 franchisees. accommodate an increasing number of been instructed to market another prominent international events. As well as being home to hotel on the French Riviera. The renowned the famous film festival, the Palais des Festivals 182-room Cannes Montfleury Hotel is et des Congrès in Cannes hosts a variety of offered for sale with the benefit of a sale and other international events including MIPIM, manage-back agreement with . The four-star the property market event, which attracted hotel is located in the peaceful surroundings of more than 26,000 delegates in 2007, and MAPIC, the Parc Montfleury, just 10 minutes walk from the retail real estate event, which attracted the centre of town and Le Croisette. We expect more than 10,000. strong interest from both French and international investors. The Acropolis Convention Centre in Nice has Bonsaï Hotel helped to establish the city as the second largest conference destination after Paris, providing a total surface area of 30,000 square metres and hosting 180 events each year, accommodating approximately 700,000 delegates in total.

8 Barceló instructs Christie + Co to sell five hotels by Yves de Bouttemont, by Inmaculada Ranera, Location Manager, Rennes Managing Director, Spain Christie + Co increases presence in France

At the beginning of the year, we increased our The opening of our Rennes office will further international presence with the opening of our improve Christie + Co’s geographical coverage, third French office, in Rennes, Brittany. providing a local presence to help ensure that our customers continue to receive the best The addition of the Rennes office follows the possible service. Barceló Hamilton, Menorca opening of our first French office in Paris in 1998, and of our second in Marseilles, which With almost 900 hotels, spread across an In November 2007, our Spanish office was opened in 2006. extensive area, Brittany is one of the most instructed by Barceló Hotels & Resorts, to sell popular destinations for beach holidays in five purpose-built hotels located in the Balearic Local demand in the Brittany region has France and an increasingly popular destination and Canary Islands. increased at such an encouraging rate that for short-stay breaks. we felt the time was right to establish a The hotels, which comprise a combined total of presence in the region. The hotel stock in Brittany comprises 16% budget 1,870 rooms, are located in Lanzarote, Menorca, hotels, 57% two-star hotels and 27% three and Ibiza, Majorca and Gran Canaria, and are Our French offices have enjoyed great success four-star hotels. The mid-market and luxury available for sale individually or as a group. during 2007, with transactions including the sale sectors may only make up less than a third of of the 182-bedroom Sofitel Nice on the French the total offering, but these categories enjoy Barceló, which owns or manages around 160 Riviera, the acquisition of the Jardins de Paris the highest average occupancy levels. At the hotels in 15 countries, including the US, Turkey portfolio in the capital and the acquisition of a end of 2006, occupancy reached 73%, compared and Bulgaria, has appointed us to lead a series package of 19 Bonsaï-branded hotels on behalf with 71% recorded the previous year. Average of non-strategic disposals. of Dynamique Hotels. occupancy levels in the budget hotel sector closely follow, at 72% during 2006. The disposal agreement is part of the company’s plans to focus on the luxury hotel sector, with the aim of operating an entirely four and five-star estate by 2010. It is set to launch its brand into the UK through its management of Paramount Hotels.

The group took over the 20 hotels in September under a 45-year lease agreement with owner Dawnay Shore Hotels. The group plans to manage a total of 40 hotels in the UK within the next three years.

Last October the company announced it had acquired the remaining 83.5% stake in eight hotels it formally shared with property group Martinsa Fadesa for €148 million. The three-star Touring Hotel in Saint-Leonard-des-Bois, which Christie + Co sold within a few days of the Rennes office opening

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Starwood request puts International Advisory Group in its Element JER Partners goes that little by Carine Bonnejean, Associate Director bit further with Christie + Co by Simon Hudspeth, Director and Head of Hotel Consultancy

Christie + Co’s consultancy team provided advice Morethanhotels also owns two sites near to JER Partners, the private equity arm of US Birmingham NEC, both of which have planning real estate investor JE Robert Companies, in its permission for hotel development. Once acquisition of Morethanhotels. The hotel group completed, the group will comprise around was acquired for an undisclosed sum believed 1,450 rooms. to be in the region of £115 million last October. Malcolm le May, president of JER Europe, said: We completed a definitive study on the UK’s “The UK limited service hotel market, which is branded budget hotel market to assist JER in currently fragmented and undersupplied, We were recently commissioned by preparing for the acquisition. The due diligence presents significant investment opportunities. Hotels & Resorts to conduct a landmark research documentation we provided included a thorough project into the extended stay market in Europe. review of the market as a whole, involving “The acquisition of Morethanhotels is a first contact with all major players in the UK, step, providing JER with economies of scale, The purpose of the research was to enable and a property-by-property review of each credibility with franchisers when expanding, Starwood to evaluate the potential for its new of the trading Morethanhotels. and visibility to other potential vendors of Element brand, which was announced in 2006. multiple sites or individual hotels.” The quality and depth of research, analysis and The detailed research programme investigated reporting were greatly appreciated by the client. Acting on behalf of private clients, we also existing and potential supply in key selected sold the Express by Stevenage markets across the UK, France, Austria and Russia JER said the acquisition of the privately owned to Morethanhotels (see page 14). and evaluated the potential for extended stay Morethanhotels, which owns and manages 11 properties in Europe as a whole. Express by Holiday Inn, would provide it with a JER Partners also owns a 50% stake in the platform for the creation of a larger portfolio of six-strong Manotel Hotel chain in Switzerland. Formerly known as Project ESW, the Element branded hotels in the UK over the next three to brand is an extension of Starwood’s Westin brand. five years. Its design features a multi-storey window-wall to flood lobbies with natural light and public spaces, which will include a water feature.

It also incorporates an outdoor area, with a courtyard and patio where guests are invited to socialise and relax by an outdoor fire pit and barbeque. Element hotels are also smoke-free.

Starwood opened its first hotel under the new brand in Lexington, Massachusetts late last year. It expects to have about 100 Element hotels developed by 2012 and plans to introduce the brand in major destinations in Asia, Europe, Africa, the Middle East, South America and North America.

10 by Inmaculada Ranera, Bench Reviews, Managing Director, Spain coming soon to a city near you! A tale of two cities by Tom Grounds, Research Analyst

A recent study by Christie + Co and The Bench The city, which has become one of the top found that hotels in Barcelona outperformed destinations in Europe for short breaks, saw hotels in Madrid during the first nine months strong RevPAR performance throughout most of 2007. of the year. It also attracted strong midweek occupancy levels, due to several major Hotels in Barcelona experienced an 8.05% rise commercial events. in RevPAR to €127.25, compared with a 4.1% increase in the Spanish capital to €88.22. Barcelona is expected to see annual traffic grow from 30 million to 55 million passengers, A large number of Christie + Co’s clients The research found that hoteliers in Barcelona with the opening of a new terminal at its have now signed up to receive copies of our had experienced a continued improvement in El Prat airport next year. bi-monthly city reviews. The reviews are RevPAR compared with the same period in 2006. produced using desk-based research, content The study found that Madrid experienced higher provided by experienced local industry This was driven by an increase in average room average room rates during the week than at specialists, and hotel trading data from rate from €161 to €174, while occupancy weekends, due to its perception as a business The Bench. Previous and forthcoming city remained stable at 73%. destination. This also meant it suffered from poor reviews include: performance figures in the summer holiday Madrid reported a slower rate of increase in months, due to the drop off in demand from RevPAR, due primarily to growth in average business travellers. + Edinburgh (January 2007) room rate from €129 to €133, with occupancy of 66%. However, the city is expected to benefit from the + Manchester (March 2007) shortly to be completed International Convention The report showed that Barcelona benefited from Centre, as well as from the extension of the + Bath and Bristol (May 2007) a more balanced seasonality than Madrid, with IFEMA exhibition centre, which will increase its leisure demand complementing business tourism, capacity by 50,000 square metres. + Newcastle and Gateshead (July 2007) resulting in high year-round occupancy, average rate and RevPAR. + Birmingham (September 2007)

+ Barcelona & Madrid (September 2007)

+ Leeds (November 2007)

+ Glasgow (January 2008)

+ Berlin (March 2008)

+ Liverpool (March 2008)

+ Cardiff (May 2008)

Extension to the IFEMA exhibition centre, Madrid

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There’s a doctor in the house!

by Markus Beike, by Markus Beike, Managing Director, Germany Managing Director, Germany

Christie + Co’s Berlin office has appointed the German market set well known hotel finance specialist, Dr Dieter Hasse, as its Location Manager. for interesting year Managing a team of four, Dr Hasse will be responsible for hotel market activity in Berlin and in the new states in East Germany, as well as providing hotel funding advice to all of his colleagues in Germany. He holds a Masters degree in Business Administration and Economic Geography.

Prior to joining Christie + Co, he worked at Deutsche Kreditbank AG in Berlin, where he was responsible for corporate finance in the hotel and tourism markets. He was integral in developing an internal system for benchmarking the valuation of hotel properties, using comparative data gathered from previous assignments.

Dr Hasse previously spent 10 years with Deutsche Bank, with responsibility for specialist finance and tourism infrastructure. He is also co-author of the textbook “Finanzierungsleitfaden für die Mittelstandshotellerie” (“Financial Compendium for Medium-Sized Hotels“), which was published Despite many dire predictions, the German hotel Hotel occupancy and RevPAR in Germany are last November. investment market experienced robust growth in currently lower than the European average, 2007. As witnessed in the record year of 2006, but they are both on the increase, ensuring We employ some of the leading hotel property we experienced a deal churn of over two billion that investor interest is maintained. specialists in Europe and we are delighted that euros for 2007 — even against the background of Dr Hasse has agreed to join us. His arrival the US credit crunch, which limited activity in the The major and often quite spectacular portfolio further strengthens our hotel advisory and third and fourth quarters. transactions of recent years are expected to have brokerage team. only a limited effect on the 2008 transaction Demand for hotel property in Germany was volume total. As an immediate result of the US high during 2007, particularly from international credit crunch, outside capital for those leveraged investors, who have been dominating the hotel transactions might be more difficult to raise. investment scene since 2004 and continue to control the market. In nine out of ten portfolio Even so, there is currently no reason for transactions, investment capital comes from concern in the German market, which is still abroad and even some 70% of single asset very dynamic. Another wave of hotel sales transactions are driven by foreign investors. is conceivable for the not too distant future, when investors will review their portfolios. The German economy is currently in upswing and Dr Dieter Hasse, Location Manager although the credit crisis has slowed this growth, the outlook for the hotel market remains positive. 12 Christie + Co makes star sale in Hamburg by Torsten Scholl, Director & Hamburg Office Location Manager

At the end of 2007, Starman UK Services Company, the joint venture owned by Starwood Capital and Lehman Brothers, instructed us to sell Le Meridien hotel in Hamburg-Stillhorn.

The four-star, 150-room hotel was acquired by Fattal Hotels, the Israeli hotel company, for an undisclosed sum.

The company plans to operate the property as part of its European division entitled Leonardo. Fattal currently operates 12 hotels under the Leonardo brand in Germany.

Felicity Black-Roberts, director of property at Starman, said: “The Stillhorn property was not a good fit for the Starman portfolio and we were delighted to be able to restructure the ownership and sell the freehold to Fattal Hotels.”

Starman acquired the former Le Meridien estate in 2005. The company said it was focused on driving the growth of the portfolio through further investment.

The landscape of hotel properties in Germany Last year, also acting on behalf of Starman is changing rapidly. Not only are there UK Services Company, we brokered the sale development projects for 250 new high-end of Le Méridien Phoenicia in Malta’s capital city, hotels waiting in the pipeline. Also, more and Valletta, to Heuston Hospitality. more hotel corporations are surging onto the market to establish their brands in the most significant inbound and outbound market for tourism and business travel.

Currently, German hotel properties are still a bargain by European standards. The reason is the comparably low productivity of German hotels. In particular as far as room rates are concerned, Germany is clearly lagging behind other European countries. But it is indeed this potential generated by low room rates that Le Meridien hotel, Hamburg-Stillhorn fuels the creativity of international investors.

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Travelodge checks into Chester development

by Jon Patrick, Director

Express by Holiday Inn

Acting on behalf of Opus Land, Christie + Co successfully signed a lease agreement with Christie + Co takes the , the budget hotel chain, to operate a 60-room hotel in “The Exchange”, a 72,750 sq ft, mixed-use scheme, which is currently under Express route development in Chester. by Sebastian Meredith, Associate Director Opus is developing the former BT exchange building, which is located immediately opposite the city’s renowned Amphitheatre and Grosvenor Christie + Co has strengthened its relationship The potential for further development of the Gardens, into a high quality mixed-use scheme with the leading Express by Holiday Inn hotel business attracted a number of interested parties incorporating a hotel, café bar, restaurant, brand with the sale of properties in Strathclyde and several existing franchisees came forward offices and retail units. and Stevenage for a combined sum in the region before a deal was agreed with Morethanhotels. of £18 million. The internal layout of the existing property We believe that the property will fit perfectly lends itself perfectly to the creation of Acting on behalf of LRG Acquisition, we sold the with Morethanhotels’ growing portfolio of limited Travelodge’s 60-room format. long leasehold on the Express by Holiday Inn service hotels across the UK. Strathclyde Park, which was the first property to The Chester opening will form part of the budget open under the brand in Europe. The Stevenage and Strathclyde transactions are hotel chain’s plans to add around 40 new hotels just two of a number of exciting projects we and 4,000 rooms every year. The company The lease on the 120-room property, which was have been working on involving the Express by currently operates around 315 hotels in the UK extended in 1998, was acquired by Geminex Holiday Inn brand. As well as transacting sales and aims to achieve a target of approximately Hotels & Leisure — the newly formed hotel arm and acquisitions, we have also been involved in 1,000 hotels, providing 70,000 rooms by 2020. of Festival Healthcare, which will manage the development projects and operator searches hotel on a franchise basis. over recent months. Opus Land, which was founded in 1999, operates as a property developer and investor from its Located ten miles south-east of Glasgow, this Most notably, last year, we acted for the Lewis bases in the West Midlands and West Yorkshire. high-profile hotel enjoys an excellent trading Group to identify Butterfly Management to Since it was established, it has concluded location at the centre of a thriving commercial operate a new 120-room Express by Holiday Inn numerous developments across the UK, including area. Following lengthy negotiations, we were at Stroud Park, near Banbury. major projects in and around Birmingham, pleased to be able to assist Geminex in the Bradford and Bristol. growth of its hotel portfolio.

Acting on behalf of private clients, we also sold the Express by Holiday Inn Stevenage to Morethanhotels, the leading budget sector operators, who we advised JER partners to acquire in October last year (see page 10).

The 129-room purpose-built property was sold with the benefit of an existing brand Travelodge, Chester franchise agreement under the Express by Holiday Inn brand.

14 Former BBC HQ provides development by Mark Stevens, opportunity Managing Director, Christie Corporate Finance by Kerr Young, Investment

CCF assists Balbirnie House development

Acting for the hotel’s private owners, hotel having undertaken several valuations of Christie Corporate Finance assisted in the the business in recent years. Realising that provision of project funding to enable the Christie Corporate Finance could help secure extension of the renowned Balbirnie House Hotel the required level of funding to make the in Fife. The hotel is now able to significantly planned development a reality, he introduced extend its facilities, by developing a £5 million us to the owners. BBC Scotland’s former headquarters, Glasgow Spa and additional bedrooms. After discussions with a number of potential The 30-room hotel, which is set in 400 acres of funders, we were able to introduce Clydesdale Christie + Co has been instructed to find a hotel parkland, is owned and operated by the Russell Bank to the Russell family and, once planning operator for an 85-room boutique hotel at Queen family, and is widely acknowledged as one of the permission was obtained in late June 2007, they Margaret Drive, in Glasgow, the prestigious former finest privately-owned, luxury hotels in Scotland. confirmed their commitment to the project. headquarters of the BBC in Scotland. The hotel has won many accolades including the hotelreviewscotland.com award for large classic The Spa development is scheduled to start in The development of the site in the city’s West End wedding hotel of the year, which it picked up early 2008 and opens in late Spring 2009. It will is to be undertaken by a joint venture between twice in a row. cement the hotel’s position as one of the finest Esk Properties and Blackrock International Land. privately-owned hotels in Scotland. Norman Cockburn, Director of Valuation Services The BBC chose Esk and Blackrock from 18 for Christie + Co, who is based in Edinburgh, has contenders to develop the 5.3 acre site, which had a long relationship with the family and the will comprise the boutique hotel and around 200 high quality, new-build residential units.

Esk is to sensitively convert the site’s listed buildings into the boutique property, which has been described as the best hotel development opportunity to appear in Scotland for a number of years.

The current Broadcasting House complex is set within an established residential district immediately adjacent to the Botanic Gardens.

Two distinctly individual buildings, by two of Glasgow's greatest architects, form the centrepiece of BBC Scotland's former operation.

As with much of the city’s West End, the site lies within the Glasgow West Conservation Area, which seeks to protect the general integrity and character of architectural significance in the area.

15 AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY

Successful portfolio transaction prompts Berlin by Jeremy Hill, instruction Director & Head of Hotels

Following the successful sale of a portfolio of eight hotels in Germany on behalf of Accor to Taking our intelligent approach Grand City Hotels & Resorts, Christie + Co was further instructed by the French hotel company to sell the Hotellerie Deutschland in Berlin. onto the international stage

The 116-room hotel was also acquired by Grand City Hotels & Resorts, the Berlin-based Israeli As a recognised specialist within the hotel sector, Next month, Christie + Co will again be one of hotel management company, which currently Christie + Co is invited to participate in an the patrons at the 11th annual International Hotel operates over 30 hotels in Europe. increasing number of international events. During Investment Forum (IHIF) in Berlin, where 2007 we continued to increase our profile on the 26 Christie + Co staff will be representing The property, which is situated in the international stage, highlighting to global clients the company. Reinickendorf district of Berlin, will continue and hotel industry experts our approach to to be managed by a franchisee, under Accor’s business property in Europe. Our International Managing Director Chris Day is brand. participating in one of the plenary sessions entitled “The Outlook for the European Hotel Our nationwide market presence, with five Industry — A look at the numbers, trends and offices across the country in Berlin, Dusseldorf, where things are headed. Which gear are we in”. Frankfurt, Hamburg and Munich, largely I have been invited to participate as a panellist contributed to this successful transaction. in one of the breakout sessions entitled “The Property Transactions Market — Time to Buy We conducted a comprehensive marketing or Time to Sell?” The IHIF is a key event for campaign in high-circulation dailies and members of the European hotel investment periodicals, which also enabled us to enhance community, with more than 1,400 senior level brand awareness and strengthen our image executives attending last year’s forum. Christie + Co stand at MIPIM as specialists. Christie + Co’s international presence will be Last October, we were one of 1,823 companies expanded even further this year, with Chris Day from 43 countries who exhibited at EXPO REAL also scheduled to speak at the fourth Arabian 2007 in Munich. The commercial property event Hotel Investment Conference (AHIC) in Dubai, attracted an incredible 23,800 visitors. which is being held from 3rd to 5th May 2008 at the Madinat conference centre. Our prominent, purpose-built exhibition stand attracted large numbers of visitors and provided a venue for several useful meetings during the event. Christie + Co was well represented, with nine members of the German team in attendance, Hotel Ibis, Berlin working alongside five people from the UK.

Markus Beike, Managing Director in Germany for Christie + Co was invited to take to the stage as a panellist in the “Special Real Estate Forum”, where he was asked to share his knowledge of Christie + Co stand at EXPO REAL the boutique and spa hotel sector.

16 Christie + Co enters Scandinavia

by Kimmo Virtanen, Director of Scandinavia, the Baltics and Russia

More than 1,000 industry leaders are expected to attend the conference, which has been described as the most important event of the year for those who are thinking about the future of the hospitality industry in the Middle East. Christie + Co is set to increase its presence in Northern and Eastern Europe, with the opening Finally, our Investment team will again make of its first Scandinavian office this spring in sure that Christie + Co has a strong presence Helsinki, Finland — the 12th major European at MIPIM, the world’s premier real estate office for the company. summit, which is taking place next month in Cannes, France. Our team of four will concentrate on opportunities across Denmark, Finland, Details of all forthcoming events, together with Norway, and Sweden, and the growing hotel contact details for the attendees, are available market in the Baltic States. on our website — www.christiecorporate.com. There is a significant amount of activity taking place across the whole region but both the Nordic and Baltic states are currently underdeveloped regarding the major hotel brands.

We will also be looking to tap into the potential opportunities that exist in Moscow and St Petersburg, which have populations of ten million and four million people respectively.

With cross-border deals in the Nordic states currently at a premium, there is also a gap for a service provider to broker deals between the respective countries, which we will be looking to fill.

17 AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY

Avon calling Recent single asset transactions for Swire The Averard Hotel, London

Group Acting on behalf of the vendors, Christie + Co sold the 60-room Averard Hotel in central London to a private international investor, by means of a share sale. This imposing hotel is centrally located opposite Hyde Park by Jon Patrick, Director and within easy reach of Kensington Gardens, as well as Lancaster Gate underground station. Offering accommodation on a bed and breakfast basis, the hotel attracts strong leisure and mid-week corporate trade. The Averard attracted a considerable amount of interest. Following a competitive bidding process, we received six offers in excess of the guide price and contracts were exchanged within just five months of the hotel’s Christie + Co brokered a deal on behalf of introduction to the market. We had previously acted for the owners in to sell the 76-room Avon Gorge Hotel their sale of the 112-bedroomSOLD New Ambassador Hotel in Bournemouth. to Swire Properties, the real estate arm of the Swire Group, the Hong-Kong based conglomerate, for £15.5 million. Beauport Park, East Sussex The Avon Gorge Hotel occupies a superb location, in Bristol’s trendy Clifton Village Beauport Park, a historic Georgian country house hotel set in overlooking Brunel’s famous Suspension Bridge, approximately 38 acres in East Sussex, was sold by Christie + Co to and this, together with the development potential Bannatyne Hotels Ltd, which is owned by entrepreneur, Duncan Bannatyne afforded by the property’s various planning of Lion’s Den fame. The 25-room hotel was placed on the market on behalf of Ken Melsom, who acquired the business in 1983, and business partner, consents, is no doubt what attracted Swire to Stephen Bayes, at an asking price of £4 million for the freehold interest the hotel. by share transfer. The property attracted strong interest from a variety of private and corporate operators resulting in a competitive bidding The property also benefits from the recently process and an ultimate sale price, which met our client’s expectations. refurbished Bridge Café and Bar, which features The Bannatyne Group plans to redevelop the hotel as a destination health spa. an all weather deck that provides al fresco eating SOLD with stunning views.

Swire is expected to pursue additional planning Frederick’s Hotel & Spa, Maidenhead permission in order to further develop the hotel and its range of services, as part of plans to After 30 years of ownership Frederick Losel instructed Christie + Co to develop a 100-strong unbranded hotel group confidentially handle the sale of the 37-room Frederick’s Hotel & Spa in in Europe. Maidenhead. The hotel, which includes an award-winning restaurant and extensive conference/banqueting facilities, was acquired for an undisclosed Acting on behalf of LMH we sold the three-strong sum by a private investor and will be operated under a new management Alias Hotels group, which includes properties in contract by Bespoke Hotels. We received a good level of interest from a variety of potential bidders but the hotel was eventually bought by Brighton, Cheltenham and Exeter, to Swire for an a special buyer who identified its unique quality and valued the benefits undisclosed fee in October 2006. the property offered. SOLD

The Crab at Chieveley

Acting on behalf of owners David and Jackie Barnard we sold the Crab at Chieveley for an undisclosed sum to Heritage Hotels, which is owned and operated by the Hughes family. Offers of around £5 million were sought for the 14-room property, which includes private outdoor hot tubs and rooms named after exotic locations from around the globe, such as the South Pacific influenced “Bora Bora”. Heritage Hotels also owns the nearby Newbury Manor Hotel, the 4 Star Park House Hotel in Shropshire, and the Churston Court HotelSOLD in Brixham. The Avon Gorge Hotel, Clifton Village

18 completed by Christie + Co Award-winning

The Edgemoor Hotel, Devon Cheshire

Christie + Co sold the Edgemoor Hotel in Bovey Tracey, Devon, for an undisclosed sum, with offers in excess of £2 million sought. The 16-room property sold hotel, which is on the edge of Dartmoor National Park, includes a 30-cover restaurant, a 22-cover bar/bistro, a lounge, three conference rooms, a two-bedroom manager’s flat, and a four-bedroom owner’s house. to Prima Hotels The new owners are Andrew and Joanne Marshall, experienced operators, who sold their hotel in Filey, North Yorkshire through our Leeds Office.

Christie + Co sold the 18th Century Nunsmere Hall SOLD Hotel to Prima Hotel Group for an undisclosed sum on behalf of private owners, Malcolm and Julie McHardy.

The Draycott Hotel, London This 36-room Victorian country mansion, which is located in the heart of the Cheshire countryside, Christie + Co negotiated the off-market sale of the 5 Star Draycott Hotel in adjacent to a 60-acre lake, features seven luxury Cadogan Gardens, close to Sloane Square, in the heart of the Royal Borough suites as well as a two AA Rosette restaurant, three of Kensington & Chelsea. We were instructed to confidentially market the conference rooms and banqueting facilities for up property on behalf of the majority shareholder, who owned a 73.33% LLP to 300 people. interest. We received numerous offers, before selling the majority share to the existing operator and minority interest holder – The Mantis Collection. Subsequently, we have been instructed by The Mantis Collection, to act in It attracted a considerable amount of interest an advisory role, in relation to an imminent rent review. from both individual and corporate operators.

With planning permission for a further SOLD 24 bedrooms, a leisure spa and additional conference facilities, the acquisition was ideally suited to an experienced operator who would recognise the development potential. The Derwentwater Hotel, the Lake District

After receiving a number of offers, we agreed The Derwentwater Hotel and Derwent Manor in Portinscale, in the Lake the deal as a share transfer to Prima Hotel Group, District, has been sold for an undisclosed sum. The 48-room hotel features a 60-cover bar, a residents’ lounge, a 100-cover restaurant, and a the luxury hotel company founded by Liam Walshe conservatory. This was a particularly interesting deal, given that the hotel in 1998. business was sold to an investment/real estate company, which in turn leased the property to a well known corporate hotel operator. The company recently completed a £5.2 million refurbishment of its Royal Terrace Hotel in Edinburgh.

SOLD It also owns the Quorn Country Hotel in Leicestershire, Hellaby Hall Hotel in South Yorkshire and the Stanneylands Hotel in Cheshire.

St Giles House Hotel, Norwich

Christie + Co recently secured new lessees for the renowned St Giles House Hotel in St Giles Street, Norwich. The 24-room boutique hotel, which has a 4 Star AA rating, occupies an imposing Grade II Listed property. The business had been operated, since the summer of 2007, by landlords Sutherland Walk Developments Ltd, who successfully stabilised the operation set up by their previous tenants. The St Giles House Hotel is a stunning building fronting St Giles Street, close to the centre of the city. Constructed as an insurance office in the 19th Century, the property has been carefully redeveloped and extended, retaining many original features. The new lessees are Pat and Rachel Roofe, who also own and operate the 11-bedroom Elderton Lodge HotelSOLD in Thorpe Market. Nunsmere Hall Hotel, Cheshire

19 AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY www.christiecorporate.com

Meet our European Corporate Hotels Team

Chris Day started his career in the property profession Jeremy Hill originally joined Christie + Co in 1984 and in 1975 and qualified as a Chartered Surveyor in 1980. has 20 years’ experience in the hotel and hospitality He joined Christie + Co in 1985 and became Managing sectors. He previously worked in our Birmingham Director in 1993 – having worked in our Manchester, office in a corporate hotel role, as well as managing Birmingham and London offices. Chris has overall the office for 4 years. In 1998 Jeremy moved to London responsibility for Christie + Co – both agency and to help establish Christie + Co’s European offices in professional services, with particular responsibility Paris, Frankfurt and Barcelona. Over the past ten years for our international operations. he has worked with many of Christie + Co’s corporate hotel clients and is now responsible for all the company’s hotel sector activities.

Corporate Hotel Brokerage Corporate Advisory Services Jeremy Jones, Simon Hudspeth, Armin Bruckmeier, Director & Head Director of Corporate Hotels Director & Head of Consultancy of Valuation Services, Germany [email protected] [email protected] [email protected]

Sebastian Meredith, Ian Martin, Juan Burdalo, Associate Director, Corporate Hotels Director, Corporate Hotel Valuations Location Manager, Madrid [email protected] [email protected] [email protected]

Oscar Marsland-Roberts, Robert Chess, Yves de Bouttemont, Corporate Hotels Director, Corporate Hotel Valuations Associate Director, Rennes [email protected] [email protected] [email protected]

David Creamore, Ross Petar MRICS, Maxime Dubois, Director, London Hotels Corporate Hotels Valuer Valuation Services, Paris [email protected] [email protected] [email protected]

Simon Stevens, Tom Grounds, Dieter Hasse Director, Corporate Hotels Research Analyst Location Manager, Berlin [email protected] [email protected] [email protected]

Gavin Wright, Carine Bonnejean, Philipp Kraneis, Director & Director, Corporate Hotels Associate Director, Consultancy Head of Investment, Germany [email protected] [email protected] [email protected]

Steve Rodell, Jake Egberts, Thomas Lamson, Corporate Hotels Associate Director, Consultancy Managing Director, France [email protected] [email protected] [email protected]

Maureen Doyle, Inmaculada Ranera, Corporate Investment Hotel Consultant Managing Director, Spain Jonathan Parrish, [email protected] [email protected] Director and Head of Investment [email protected] Torsten Scholl, Director International Corporate Hotels & Location Manager Hamburg Jon Patrick, Marta Andreu, [email protected] Director & Head of Leisure Location Manager, Barcelona [email protected] [email protected] Guido Schuerken, Associate Director & Location Manager, Dusseldorf Daniel Griffiths, Valerie Astruc, [email protected] Director, Investment Corporate Hotels, Marseilles [email protected] [email protected] Kimmo Virtanen, Director, Scandinavia, Russia and the Baltic States Kerr Young, Markus Beike, [email protected] Investment Managing Director, Germany [email protected] [email protected]

Simon Dodd, Investment [email protected]

Christie + Co, 39 Victoria Street, London SW1H 0EU. T 020 7227 0700